Juniper Hotels likely to see muted debut, grey market premium absent

Juniper Hotels is likely to see a muted debut on February 28 despite positive market conditions. Tepid IPO subscription numbers and the loss-making status of the company, which is owned by the hotel developer Saraf Group and global premier hospitality brand Hyatt Hotels Corporation, may be among the key reasons for the flat listing, analysts said.

They feel the listing may be at a discount to the issue price of Rs 360 per share.

The Rs 1,800-crore public issue had seen a subscription of 2.08 times during February 21-23, with qualified institutional investors buying 2.96 times the reserved portion, and retail investors picking 1.28 times the allotted quota. The portion set aside for non-institutional investors was subscribed 0.85 times.

The IPO was comprised of only a fresh issue portion. An amount of Rs 1,500 crore of the net fresh issue proceeds will be utilised to repay debts and the remaining funds will be used for general corporate purposes.

"We expect Juniper Hotels to list flat or even at a discounted price, considering its overall subscription demand. The low demand can be attributed to continuous loss on books for the same financial years which is a cause of concern to new investors," Prashanth Tapse, VP-Research at Mehta Equities said.

At the upper band of Rs 360, the company is valued at Rs 8,010 crore. "Based on annualised FY24 earnings and fully diluted post-IPO paid-up capital, the company’s operational metrics remain healthy, but interest costs are weighing on profitability bringing the bottom line to net loss," Tapse said.

Juniper Hotels, which competes with listed peers like Indian Hotels Company, EIH, Lemon Tree Hotels, and Chalet Hotels, has been a loss-making company, though the losses reduced considerably in the year ended March FY23 at Rs 1.5 crore from a loss of Rs 188 crore in FY22. But revenue from operations more than doubled to Rs 666.85 crore against Rs 308.7 crore during the same period.

Further, the losses in the six months ended September FY24 increased to Rs 26.5 crore from Rs 17.5 crore in the same period previous fiscal, though there has been growth in revenue from operations rising to Rs 336.1 crore from Rs 294.3 crore during the same period.

As far as the grey market is concerned, its IPO shares are not getting any premium, the market observers said. The grey market is an unofficial platform for trading in IPO shares till the listing.

Post receiving a muted subscription response to the IPO in comparison to the other recently listed IPOs, Parth Shah, research analyst at StoxBox also expects Juniper Hotels to make a tepid debut on the bourses on Wednesday, considering the asset-heavy business model of the company, rising debt levels, and continued loss-making status.

Being in the luxury hotel development and ownership space, Juniper Hotels has a portfolio of seven hotels and serviced apartments with a total of 1,836 rooms, under three distinct segments namely luxury (the Grand Hyatt Mumbai Hotel and Residences and Andaz Delhi), upper upscale (the Hyatt Delhi Residences, Hyatt Regency Ahmedabad, Hyatt Regency Lucknow and Hyatt Raipur; and upscale (Hyatt Place Hampi).

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